Punch announced on 15 January its latest proposal for the re-structuring of its debts with the launch of its proposed Capital Restructuring of the Punch A and Punch B securitisations. Early reactions did not welcome the Overview point that ‘The Restructuring proposals are final’ (see below), and the Association of British Insurers is reviewing the proposed terms before making any comment.
Stephen Billingham, Executive Chairman of Punch Taverns plc, commented with the proposal:
“I am pleased to announce formally today the launch of the Restructuring of Punch’s securitisation structures, representing the culmination of 14 months of extensive stakeholder engagement. We believe that the Restructuring is in the interests of all stakeholders and delivers a materially better position than the alternative of a default.
“The Restructuring will create a robust debt structure which will provide certainty and stability for the business. It will also provide a solid platform to allow Punch to build on the recent improvement in the Group’s trading and preserve the material synergies of running the two securitisations as part of the same Group. Stakeholders will be able to benefit from the improvements to the business we are putting in place.
“We want all stakeholders to consider the proposals carefully and thoroughly. We will continue to be available to answer any questions. It is the view of the Board that the benefits of approving the Restructuring are clear and of benefit to all stakeholders. However, failure to do so will lead to a much worse outcome with considerable uncertainty for the business and potentially significant loss of value.”
Overview
- Punch is pleased to announce the full terms of its Restructuring proposal, which represents the culmination of 14 months of extensive stakeholder engagement
- This follows Punch’s announcement on 9 December 2013 of its intention to launch formally the final restructuring proposals for the Punch A and Punch B securitisation structures (the “Restructuring”), following which Punch has had further stakeholder engagement
- The Restructuring is conditional upon the approval of the Punch A and Punch B securitisation noteholders at meetings of the Issuer companies and the approval of certain other securitisation creditors
- Consent solicitation documents relating to each securitisation and a notice of noteholder meetings to be held on 14 February 2014 are also being made available today (15 January)
- The Restructuring proposals are final. Failure to effect a restructuring is expected to lead to default in the near-term at which point securitisation cash resources (used to facilitate the Restructuring) are expected to be severely depleted with the mandatory prepayment of £188 million of available cash to Class A notes at par and loss of the £52 million Group cash contribution
Capital Restructuring summary
The proposed terms of the Restructuring reflect a number of changes to the proposals announced on 9 December 2013 as requested by stakeholders, including:
- Fixed or target amortisation schedules included for all senior notes;
- Modified Spens protection on all senior notes for any prepayments ahead of the amortisation schedules;
- Increased PIK coupons on junior notes;
- Strengthened operational covenants;
- Senior noteholder appointed independent observers to the Boards of the Borrower companies in each securitisation;
- Noteholder voting fee; and
- Interconditionality: Punch’s commitment to apply the Group resources which would be necessary for the Restructuring to go ahead is conditional on the approval of the Restructuring by all Classes of Punch A and Punch B securitisation noteholders.
The Board believes that the proposed terms of the Restructuring are in the best interests of all stakeholders and will deliver material benefits to them, including:
- Creating a robust and sustainable debt structure;
- Preserving the Group structure for the continuing benefit of all stakeholders; and
- Delivering a materially better position for all stakeholders than default
Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:
“I am pleased to announce formally today the launch of the Restructuring of Punch’s securitisation structures, representing the culmination of 14 months of extensive stakeholder engagement. We believe that the Restructuring is in the interests of all stakeholders and delivers a materially better position than the alternative of a default.
The Restructuring will create a robust debt structure which will provide certainty and stability for the business. It will also provide a solid platform to allow Punch to build on the recent improvement in the Group’s trading and preserve the material synergies of running the two securitisations as part of the same Group. Stakeholders will be able to benefit from the improvements to the business we are putting in place.
We want all stakeholders to consider the proposals carefully and thoroughly. We will continue to be available to answer any questions. It is the view of the Board that the benefits of approving the Restructuring are clear and of benefit to all stakeholders. However, failure to do so will lead to a much worse outcome with considerable uncertainty for the business and potentially significant loss of value.”